What Is a Holding Company?

A holding company is the legal holding of an organization, which may have a completely different business name and be based in a different country. Understand what a holding company is with help from a management teacher in this free video on business.

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Video Transcript

Hi, my name is Mark, and we're going to look at: What is a Holding Company? A holding company is a, is the legal holding of an organization. So, it could be that we have a company called XYZ, and our brand is called XYZ. But, it doesn't necessarily mean that the owners of the organization, or the investors, shareholders, or partners of the organization have the same name. So, it could be that the holding company, which is the funding, or the financially supporting part of the organization is not only, has a different name, it could be based in a different country. Or if it's based in the same country, in different state, different county. The holding company is really the organization that incorporates the owners, the financiers of that organization. So the holding company, is what we call like the mother ship. It is the financial, financial responsible or, financial investor part of the operation. It's almost like the silent partner within an organization. You don't necessarily now it's there. It can be based in a different state, different town, different country, and yet it's very much responsible for the operation of the business, but it could be operating a number of different businesses under that particular holding. So, for example, it could be that your company could be the holding organization that operates four or five franchise operations in different, different trading environments, but the investor, the management of that business is what we call the holding company that funds the other activities.